Saturation Point?

[elkimmeg]

While we make recommendations for new pellet stoves, has anyone considered the pellet supply and existing stoves have hit a
Saturation point?

Before Katrina Pellet stoves and pellet supplies made economic sense, at pellet pricing under $150

Since Katrina, 750,000 more Pellet stoves have been added to the supply side of pellet inventory. We have seen shortages and pricing above $300 per ton

There are other factor effecting the pellet supply, Home construction. The materials for pellets manufacturing comes from wood processing. Since housing starts are way down so has manufacturing wood products ,ie less raw materials for Pellet manufacturing. Plus competition for the existing supplies in the form of animal bedding and landscaping wood chips. On top of that, foreign Markets are also buying into our supplies.

Just wondering out loud here but if a pellet stove owner every time we recommend a purchases are we not adding competition to the very pellet supply that is already taxed. An argument can be made pellet manufacturing has been ramped up , but look at the final cost, look at the competition, and less raw materials available.

Just some food for thought here

 

[Corey]

That is a good point - I touched on that last year, wondering if, as wood burners in general, we would be best off recommending people not take this route and choose something else. This would save wood resources and help reduce the possibility of government regulations, etc. Hoping that if just a few people do it, burning will be flying 'under the radar' so to speak.

Of course, I realize that there are also plenty of members from the hearth industry here - which would no doubt like to see a growth in the market. I guess the two words that are often tossed around are 'sustainable' and 'responsible' growth.

 

[EatenByLimestone]

If traditional wood based pellets become too pricey, wouldn't alternatives be found in any other fuels that could be pelletized? I've seen corn (also has supply problems), sawgrass, cherry pits....

It seems to me that anything organic could probably be ground up and pelletized...

Matt

 

[elkimmeg]

Cozy made a good point .It also can be applied to cord wood supplies. Imagine going to the local stump dump a where you have gotten your supplies for years and find out your recommendations / promotions, you are now competing for that supply source. Hell, that's like giving away you secret fishing spots, to find out they are occupied when you arrive.

Are we better off flying under the radar? Why self create your own competition?

Matt also makes a good point but until we see enough volume to the supply end, are we not in the same situation with oil? We keep waiting for research and manufacturing to bail out our demand consumption's. The philosophy works, but human nature kicks in. Nothing will be done to alleviate, till the situation has digressed to intolerable levels. We would rather fight wars than change.

 

[EatenByLimestone]

Cordwood and the brush dump have a self limiting factor... Sweat Equity. Many people don't want to sweat or get a bit dirty to keep themselves warm. Much of my wood comes in lengths of ~12" too. It looks a bit funny in a stack of 16" splits.

The pellet convenience factor is a prime sales point. Just pour in another bag! I think you will see demand for bio bricks and pellets, etc grow faster than cordwood.

Matt

 

[babalu87]

Its already there, once they (pellet plants) saw that they could compete with OIL/NG the price skyrocketed. If your doing it to "be green" , I think thats great but I cant imagine you are saving money at $260/ton.

 

[Metal]

I will not insult anyone here's intelligence by explaining the law of supply and demand, but let's just say if there is a supply problem, it will take care of itself.

 

[MrWinkey]

Around my area there was a few shortages last winter.

I was buying some summer building supplies and saw a semi truck of pellets all bagged and on pallets roll up.

Asked the dude hey "What the heck it's 90 outside!" He told me the have not stopped getting as many shipments as they can. He said they will get a truck a week the whole year because last year they ran short.

So hopefully no shortages this year in my area of the North West! (I am buying early just in case)

 

[iceman]

as far as shortage goes i think we will be okay .... until some part in the country gets some crazy cold spell that will cause shortages
but you are right about cord wood people do not like to do the work
i was one of those but as i look at my oil bill (projected) and my pellet bill (even though its just an area heater
buying a woodstove insert at 2-3000 and possibly another next year
as well as having access to really cheap wood (a lot free) its a no brainer......
the stove will pay for itself in 3 yrs or less seeing my oil bill @ 2.50 gal ... if its a bad year could be close to 1000 =2500
i am buying a saw and splitter now....

 

[mtalea]

All very good reading here. I believe I know where pellets come from...scrap wood. etc; but my question is how do they get the wood to use for pellets? And cant there be a system setup? for example...Lets say my city had a pellet maker....I call them and say,hey Im building a house right now.is it ok to drop off all my wood scraps into your bins? or ask for a bin onsite..etc;

Or am i way off here?

 

[Metal]

It is more the scrap from saw mills, the stuff the cut off to make the nice square (and almost never straight) boards you see at the lumber yard.

 

[karl]

I must be very fortunate to live where I do. There is wood everywhere. When I look in the woods behind my house, there is dead fall that will rot before I burn it. Years ago when I first thought about burning wood I talked to a guy about it and told him I would scrounge from around the house. He said that will last you a few years. I kind of figured he would be right. But since really looking and scrounging out back. I'm not so sure. I counted three huge oak trees that have already fallen, not to mention dozens of other small trees already down as well. I see three more huge oaks that are dead and standing. I know I can't heat a house from 6 or 7 acres of woods, but I think I will be able to go much longer than just a few years. I don't plan to cut anything living down. I have 6 cords cut right now and I'm guessing that will be about a two year supply and you can't even see where I took it from the woods.

 

[Xena]

I bought my pellets last May and they were delivered
a few weeks ago. Oil in my area is up as high as 2.79
a gallon right now. I expect it will only go higher from
there. I paid 218.50 per ton for my pellets (delivered).
I'm gonna be a happy pellet head this year.

 

[webbie]

All very good reading here. I believe I know where pellets come from...scrap wood. etc; but my question is how do they get the wood to use for pellets? And cant there be a system setup? for example...Lets say my city had a pellet maker....I call them and say,hey Im building a house right now.is it ok to drop off all my wood scraps into your bins? or ask for a bin onsite..etc;

Or am i way off here?

Some pellet mills are off-shoots of large sawmills. Others, like New England Pellet, purchase sawdust from furniture factories, saw mills and other sources. They buy it by the trailer load.....

So pellet mills end up being located where there is LOTS of wood to feed the beast....
see:
https://www.hearth.com/econtent/index.php/articles/hearthnet_visits_hearth_manufacturers

(top story and/or video)

 

[Eric Johnson]

Or, when they can't get the sawmill residue at an affordable price (or can't get it at all, since they are competing with pulp & paper mills for the same raw material), they buy logs and debark, grind up and dry them to make the pellets. You're talking tons and tons of wood fiber daily.

 

[GVA]

While we make recommendations for new pellet stoves, has anyone considered the pellet supply and existing stoves have hit a
Saturation point?

Before Katrina Pellet stoves and pellet supplies made economic sense, at pellet pricing under $150

Since Katrina, 750,000 more Pellet stoves have been added to the supply side of pellet inventory. We have seen shortages and pricing above $300 per ton

There are other factor effecting the pellet supply, Home construction. The materials for pellets manufacturing comes from wood processing. Since housing starts are way down so has manufacturing wood products ,ie less raw materials for Pellet manufacturing. Plus competition for the existing supplies in the form of animal bedding and landscaping wood chips. On top of that, foreign Markets are also buying into our supplies.

Just wondering out loud here but if a pellet stove owner every time we recommend a purchases are we not adding competition to the very pellet supply that is already taxed. An argument can be made pellet manufacturing has been ramped up , but look at the final cost, look at the competition, and less raw materials available.

Just some food for thought here

Funny you should mention this....
During the east coast shortage in 05 I told everyone that I hated the pellet stove just to help curb the massive amount of sales and the lack thereof of pellets....
That was the year here in gougeachusetts where the pellets went from $180 a ton to $350 a ton...
This was the beginning of the pelletized fuel joining the same supply and demand rules as big oil...
The west coast got hit last year......
I'm starting to get excited about moving South...

 

[BrotherBart]

I'm starting to get excited about moving South...

Then you will wish for a pellet air conditioner.

 

[stoveguy2esw]

pellet shortages in a lot of ways is tied in with world events (crazy as it seems)

1. oil prices go up , folks buy pellets stoves (and woodstoves, but cordwood isnt the same, you can cut down a tree with a 200 dollar chainsaw, you cant buy a pellet mill at home depot for 200 bucks and run it in your yard) now figure 30K new pellet stove owners(just a figure , i dunno how accurate it is) who buy a ton or 3, on top of existing users buying their usual amount.

2. in "y2katrina" with the energy bills for oil and gas jumping,(at the absolute WORST possible time) then couple in the fact that the sawdust spoil from mills is also used for particle board (a building material that came into a big demand for rebuilding the gulf coast) became more scarce and also more expensive (remember supply and demand, demand drives prices up, supply surplus drops it)demand jumped, so all of a sudden, pellet makers were having to look around for supplies (which were more expensive due to increased competition) rather than just calling the local sawmills and saying "i got a truck coming"

3. fuel prices also have an impact on production costs of pellets as well. a lot of pellet mills use gas or other fossil fuel heat to facilitate the drying process part of pellet manufacturing, this means the "hotel load" for the factory itself is higher in cost and the higher cost of production from this also is passed on to the consumer. the cost of fuel for delivery is also higher so that in turn is passed to the retailer, and also ends up with the consumer to some extent. (not bashing the pellet selling dealers in here , quite the contrary , im defending them. unfortunately being the retailer often customers misconstrue the higher cost as being "price gouging" in most cases this is simply not true, ton for ton many retailers do not make a large profit from the sale of pellets ( there are threads here to support that)but they carry them even at slightly above "break even" to supply the folks that bought stoves from them. for this they should be in turn "supported" by their customers as they could easily drop their pellet sales justifiably on paper due to no profit. now im not saying that gouging doesnt happen, ive seen it and it sickens me because pellet stoves dont come out of bubble gum machines, its a big investment.

 

[stoveguy2esw]

Or, when they can't get the sawmill residue at an affordable price (or can't get it at all, since they are competing with pulp & paper mills for the same raw material), they buy logs and debark, grind up and dry them to make the pellets. You're talking tons and tons of wood fiber daily.

paper mills used chipped wood, not necessarily th same as sawmill spoil (dad made paper for 40 years ive seen the stuff they use, looks like somthing run through one of those thngs that the tree service grinds up limbs with)not sawdust like pellets are made of

 

[BrotherBart]

Same thing is happening with everything Mike. Went to the grocery store today and a gallon of milk that two weeks ago was $3.79 today was $4.19. Loaf of house brand bread two weeks ago was $.99, today $1.15.

Fuel prices are driving everything through the roof. The only salvation I have is owning a lot of Exxon stock. But it is not going up as fast as milk, bread and pellets.

It ain't all supply and demand right now on the price front.

 

[stoveguy2esw]

gawd, i know, how'd ya lik to be a farmer these days , raising food and not making enough money from it to feed your family, what a perversity that is

 

[oregonrider]

Add to the mix that a lot of mills are firing up their sawdust boilers again so there is less to sell to the pellet makers. This is because fuel oil has gotten so high. Also the fire friday that wiped out a third of a large pellet makers stock. oregonrider.

 

[BrotherBart]

Add to the mix that a lot of mills are firing up their sawdust boilers again so there is less to sell to the pellet makers. This is because fuel oil has gotten so high. Also the fire friday that wiped out a third of a large pellet makers stock. oregonrider.

Ouch. Bear Mountain getting 7000 tons of pellets burned to the ground ain't gonna help matters.

 

[stoveguy2esw]

gawd, i know, how'd ya lik to be a farmer these days , raising food and not making enough money from it to feed your family, what a perversity that is

actually , how would you like tobe an insurance underwriter for pellet mills, talk about russian roulette, we lose one every season it seems.

actually a large pellet mill will cause a drop in availability in an area, but none of them are big enough to cause a nationwide shortage if they burned down. would just be in the region they supplied (which is bad enough)

 

[elkimmeg]

I change the title back to the original intent of the post. For some reason, without explanation, it was edited and not by me